A Quebec farmers’ co-operative is launching a joint
venture with a leading Indian counterpart to build a $1.2-billion nitrogen
fertilizer plant in Bécancour, a community reeling over the decision by the PQ
government to close the province’s only nuclear power plant.

The Quebec-based Coop fédérée and the Indian Farmers
Fertiliser Cooperative (IFFCO) signed an agreement of intent on Tuesday as
part of the first phase of a project that could create between 200 and 300
permanent local jobs.

The Quebec government, through its venture capital arm Investissement Québec,
is injecting $5-million to help finance the initial $20-million feasibility
study. The province will also help finance the public hearings process and
environmental assessment studies that should be completed by 2014. Construction
is expected to begin that year, with a projected production start set for
2017.

U.S. Awasthi, managing director and CEO for IFFCO, said
that after examining 50 potential sites, Bécancour was chosen because of the
accessibility of natural gas needed in the production of urea, the essential
product used in nitrogen fertilizer. He added that Bécancour, located in central
Quebec’s agricultural heartland, also provides the proximity of a port on the
St. Lawrence River. And it offers access to railway and major road
transportation networks to facilitate distribution of the fertilizer in Quebec,
eastern Canada and the northeastern United States.

“We expect to make profits but we don’t expect to make huge profits,” Mr.
Awasthi said, emphasizing the co-operative values shared with its Quebec
counterpart. “Canada is a good choice because Canada has an abundance of
resources and fertilizer [production] needs energy.”

He added that the Quebec government’s decision to shelve the development of
shale gas was not an impediment on the co-operative’s decision. He insisted that
current supplies through Gaz Métro Inc. could meet fertilizer production demands
for the proposed project.

The plant, the first of its kind in the province, will have the capacity to
fulfill Quebec’s annual demand of 500,000 tons of urea per year. Manish Gupta,
IFFCO’s director of strategy and joint ventures, said growing demand for urea
worldwide eventually may lead to the construction of a second plant, either in
Bécancour or elsewhere in Canada.

“This is the first large scale plant in Quebec,” Mr. Gupta said.
“Because of the way natural gas is moved on the continent, there is a lot of
interest in setting up urea facilities in North America. We believe we are the
first to hit the road but there are many people trying all over the continent.
It is our intention in the future to expand as it is our intention to expand all
over the world. But we are taking it one step at a time.”

In Bécancour, community leaders have known about the IFFCO investment since
August and they saw it as a major boost to the local economy. But that was
before the newly elected Parti Québécois government announced it was shutting
down the nuclear power plant, Gentilly II. The closing will mean the loss of
more than 700 specialized and high-paying jobs, as well as an estimated 2,000
indirect jobs in the region.

In 2008, Bécancour was hit hard with the closing of the Norwegian Norsk Hydro
magnesium plant, which put close to 400 people out of work. However, in July,
Rio Tinto announced it was proceeding with a feasibility study for the
construction of a $4-billion pigment titanium plant used in the production of
paints and plastics.

The American mining company Cliffs Natural Resources was also examining the
building of a smelter in Bécancour. But the closing of the nuclear power plant
dampened the excitement over the region’s potential economic growth.

“We’ve known about the IFFCO announcement for some time now and we had our
eyes set on a couple of other projects.” Bécancour Mayor Gaétane Désilets said
in an interview. “But in no way can these projects be considered compensation
for the loss of Gentilly II. The closing down of the power plant was a precipitous decision
and will have a major economic impact. We want a meeting with Premier
Pauline Marois to see what plans the government has for the region.”

Yves-François Blanchet, the PQ MNA responsible for the region of central
Quebec, agreed that the economic fallout from the IFFCO plant doesn’t compensate
for the loss of the nuclear power plant.

But he insisted more projects were being examined and that the region stands
to benefit from initiatives his government plans to undertake. “Some projects are being discussed as we speak,” Mr. Blanchet
said on Tuesday. “But“We are optimistic that the end result for the
region will be better than what they had with Gentilly II.”

The urea production project was initiated in 2010 after efforts
by former Liberal premier Jean Charest to establish closer economic ties with
India. IFFCO is one the world’s biggest fertilizer co-operatives, with five
plants in India and interests in several others around the globe.
Coop fédérée, the biggest agricultural enterprise in Quebec, has members in
130 co-operatives that include several located in other provinces in
Canada.

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